Microsoft has often moved revenue gained from sales during the current quarter into future quarters to cover unanticipated costs such as support. More Personal Computing business is expected to generate revenue of $8.7 to $9 billion. It made a net profit of $3.8 billion on $20.5 billion revenue, which actually represents a drop year-on-year. Sales of other phones also dropped off from 24.7 million in 2015 to just 15.7 million this year. Phone revenue dived 46 percent. Surface revenue looked better; it was about $1.1 billion, up 56 percent year-on-year, driven by Surface Pro 4 and Surface Book.
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Microsoft CEO Satya Nadella said in an earnings call that “We are the only cloud provider that helps companies embrace the cloud on their own terms”.
Amy Hood, Microsoft’s chief financial officer told analysts on an earnings call, said the company expected continued growth from Surface products in the current quarter but warned that decreases in Lumia revenues would accelerate in the quarter.
Company shares sank, trading 4% lower in after-hours trading.
Windows Phone now has a 2.54 percent share of the global mobile and tablet operating system market, according to March data from the Web and mobile analytics firm Net Applications.
Basically, revenue growth has slowed to a crawl, and investors are non-plussed.
This was the third quarter of Microsoft’s 2016 fiscal year, or Q3 Fy2016 in Microsoft-speak. Adjusted revenue was $22.1 billion, in line with Wall Street forecasts.
The company listed a number of slight gains for the quarter, with Office commercial products and cloud services revenue up seven percent, and Office consumer products and cloud services revenue up six percent.
Overall one could say this quarter was a rather mixed one for the Redmond giant with a downfall in Windows and phones business whereas steady growth of business across cloud and services segment. Revenue for Office 365 is up 63 percent in constant currency on the commercial side, while commercial Office products and cloud services revenue is up seven percent. The company sold just 2.3 million Lumia devices in the quarter, a 73% decline from the same period past year. Revenue grew 1% to $6.5bn.
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But revenue from business software and Internet-based services, known as cloud computing, didn’t grow as much as many analysts expected. That’s thanks to the rise of mobile devices and software from competitors like Apple and Google.
